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    2 - Memorandum of Association

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    Sahil
    The memorandum of association is the most important document for a company as it contains the fundamental clauses such as the company's name, registered office, objectives, liability and capital. It establishes the company's name, which must not be undesirable or deceptive, and requires use of "Ltd." The registered office clause specifies the state where the company is located. The objectives clause outlines the main and other objectives of the company as well as any geographical restrictions. The liability and capital clauses establish whether the company has limited liability and the minimum capital requirements. Any actions outside of what is allowed in the memorandum are considered ultra vires. Alterations to the memorandum require special resolutions and regulatory approval.

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    2 - Memorandum of Association

    Uploaded by

    Sahil
    1K views5 pages
    The memorandum of association is the most important document for a company as it contains the fundamental clauses such as the company's name, registered office, objectives, liability and capital. It establishes the company's name, which must not be undesirable or deceptive, and requires use of "Ltd." The registered office clause specifies the state where the company is located. The objectives clause outlines the main and other objectives of the company as well as any geographical restrictions. The liability and capital clauses establish whether the company has limited liability and the minimum capital requirements. Any actions outside of what is allowed in the memorandum are considered ultra vires. Alterations to the memorandum require special resolutions and regulatory approval.

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    The memorandum of association is the most important document for a company as it contains the fundamental clauses such as the company's name, registered office, objectives, liability and capital. It establishes the company's name, which must not be undesirable or deceptive, and requires use of "Ltd." The registered office clause specifies the state where the company is located. The objectives clause outlines the main and other objectives of the company as well as any geographical restrictions. The liability and capital clauses establish whether the company has limited liability and the minimum capital requirements. Any actions outside of what is allowed in the memorandum are considered ultra vires. Alterations to the memorandum require special resolutions and regulatory approval.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views5 pages

    2 - Memorandum of Association

    Uploaded by

    Sahil
    The memorandum of association is the most important document for a company as it contains the fundamental clauses such as the company's name, registered office, objectives, liability and capital. It establishes the company's name, which must not be undesirable or deceptive, and requires use of "Ltd." The registered office clause specifies the state where the company is located. The objectives clause outlines the main and other objectives of the company as well as any geographical restrictions. The liability and capital clauses establish whether the company has limited liability and the minimum capital requirements. Any actions outside of what is allowed in the memorandum are considered ultra vires. Alterations to the memorandum require special resolutions and regulatory approval.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Memorandum of Association

    ➢ Palmer -> It is the most important document


    ➢ Contains the Fundamental Clauses
     Name Clause
     Registered Office Clause
     Objects Clause
     Liability Clause
     Capital Clause

    NAME
    ➢ First clause – state name
    ➢ Central Government says the name should not be undesirable
    ➢ “Calculated to deceive” -> Society of Motor Manufacturers and
    Traders Ltd. vs. Motor Manufactures and Traders Mutual
    Insurance Co. Ltd.
     1902 – Protection of trade interest
     1924 – Insurance

    A. Use of the word ‘Ltd.” and Publication of Name


    ➢ ‘Private Ltd.’
    ➢ Name to be mentioned
    a) Business Letters
    b) Place of Business
    c) Official publications
    d) Negotiable Instruments
    e) Receipts
    f) Premises
    ➢ Liable only if deliberately not mentioned
    a) Dermative Co. Ltd. Vs Ashworth
    b) Nassao Steam Press. Vs. Tyler – Bastille Syndicate Ltd
    as The Old Paris and Bastille Ltd.

    B. Venture Capital Companies


    ➢ State to be
    a) Venture Capital
    b) Venture Capital Company Approval of Department
    c) Venture Capital Fund of Economic Affairs
    d) Venture Capital Finance Co.

    C. License to drop Ltd.


    ➢ Granted by Central Government subject to conditions:
    a) Company formed for promotion of commerce, art,
    religion and charity
    b) Apply money to objects and no payment of dividends
    to its members
    c) Such other conditions
    d) Exempted from minimum capital requirement
    ➢ Revoked by Government if conditions are violated

    Change of name
    a) Special resolution and approval of Central Government
    b) Ordinary resolution and approval of Central Government
    ➢ Undesirable or resembling
    ➢ Within 3 months must change the name
    ➢ New certificate of Incorporation

    REGISTERED OFFICE
    ➢ Specify the State in which Company is situated
    ➢ Within 30 days of Incorporation or commencement of business

    ➢ Change of Registered Office Situation


     Special Resolution
     Change of one city to another within the same state
     Notice to Registrar within 30 days
     Permission of Regional Director -> In case of shift from
    the Jurisdiction of one Registrar to another and then
    with Registrar
     One State to another more complicated as
    Memorandum has to be altered
    a) Special Resolution
    b) Permission of Company Law Board -> Section
    17(1) – State cannot interfere

    LIABILITY
    ➢ Limited Liability – “The liability of Members shall be limited by
    shares”
    ➢ Limited Guarantee – Contribution of member in case of winding
    up
    CAPITAL
    ➢ Public Company -> 5 lakhs paid up capital
    ➢ Private Company -> 1 lakh paid up capital

    SUBSCRIPTION
    ➢ Subscriber’s Declaration -> minimum one share
    ➢ Public -> 2
    Private -> 7

    OBJECTS AND POWERS


    ➢ Object Clause
    1) Main objects
    2) Other objects
    3) States to which objects extend – that is, non-trading
    Companies
    ➢ Restrictions
    1) Not against law
    2) Not against provisions of Company Law
    ➢ Why objects
    1) Protects interest of shareholders, that is, for what their
    money is spent
    2) Interest of creditors
    3) Serves public interest

    DOCTRINE OF ULTRA VIRES


    Ultra – Beyond
    Vires – Powers
    ➢ An action outside the Memorandum of Association is Ultra Vires
    the Company
    ➢ Case Law -> Ashbury Railway Carriage & Iron Company Ltd. vs.
    Riche,
    Attorney General Vs. Great Eastern Railway Company

    Therefore, Company to an Act


    1) Necessary for
    2) Incidental
    3) Authorized by the act
    ➢ Company now has to mention incidental objects
    Eg. Research in the field of interest of Company

    ➢ Objects, Powers and Charitable Contributions


    1) Company’s funds cannot be directed to any kind of charity
    2) Objects must be distinguished from powers, therefore,
    funds can be used for charity
    a) Transaction incidental to Company business
    b) Bonafide
    c) Benefit and to promote the prosperity of the Company

    ➢ Main Objects Rule of Construction


     Substantially state it

    ➢ Consequences of Ultra Vires Transactions


    1) Injunction
    2) Personal liability of Directors
    3) Breach of Warranty of Authority
    4) Ultra Vires acquired property
    5) Ultra Vires contracts
    6) Ultra Vires torts
     Activity in course of commission fall within the scope of
    Memorandum of Association
     Servant committed the tort within the course of his
    employment

    ➢ Alteration of Objects (Section 17)


    Yes, with certain limits
    1) Substantive Limits
    a) To enable the Company to carry on its business more
    economically or more efficiently
    b) To enable the Company to attain its main purpose by
    new or improved means
    c) To enlarge or change the local area of the Company’s
    operation
    d) To carry on some business which under existing
    circumstances may conveniently or advantageously be
    combined with business of the Company
    e) To restrict or abandon any of the objects specified in
    the Memorandum of Association
    f) To sell or dispose of the whole, or any part of the
    undertaking of the Company
    g) To amalgamate with any other Company or body of
    persons

    2) Procedure for Alteration


     Special resolution and file it with registrar

    Registration of alteration
     File the resolution with Registrar of Cos. Within one
    month
     In case of change of state within 3 months ->
    otherwise resolution lapses

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